Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Concerning the Clearing Trading Permit Holder Proprietary Transaction Fee Waiver for Orders in Multiply-Listed FLEX Options Classes, 58063-58065 [2011-23897]
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Federal Register / Vol. 76, No. 181 / Monday, September 19, 2011 / Notices
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
OCC does not believe that the
proposed rule change would impose any
burden on competition.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments were not and are
not intended to be solicited with respect
to the proposed rule change and none
have been received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
the proposed rule change or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
mstockstill on DSK4VPTVN1PROD with NOTICES
Electronic Comments
• Use the Commissions Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or send an e-mail to
rule-comments@sec.gov. Please include
File Number SR–OCC–2011–12 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–OCC–2011–12. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml.) Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
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Jkt 223001
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Section, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filings
will also be available for inspection and
copying at the principal office of OCC
and on OCC’s Web site at https://
www.optionsclearing.com/components/
docs/legal/rules_and_bylaws/sr_occ_11
_12.pdf.
All comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–OCC–2011–12 and should
be submitted on or before October 11,
2011.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.5
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–23976 Filed 9–16–11; 8:45 am]
BILLING CODE 8011–01–P
58063
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Fees Schedule. The text of the proposed
rule change is available on the
Exchange’s Web site (https://
www.cboe.org/legal), at the Exchange’s
Office of the Secretary, and at the
Commission.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of
and basis for the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65325; File No. SR–CBOE–
2011–085]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Concerning the Clearing
Trading Permit Holder Proprietary
Transaction Fee Waiver for Orders in
Multiply-Listed FLEX Options Classes
September 12, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
31, 2011, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by the Exchange.
5 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 34–
65007 (August 2, 2011), 76 FR 48190 (August 8,
2011) (SR–CBOE–2011–071).
1 15
PO 00000
Frm 00117
Fmt 4703
On August 1, 2011, the Exchange
implemented a waiver of the Clearing
Trading Permit Holder (‘‘CTPH’’)
Proprietary Transaction Fee (the ‘‘Fee’’)
for CTPHs executing facilitation orders
in multiply-listed FLEX Options classes
(the ‘‘Waiver’’).3 At that time, the
Exchange intended to exclude from the
Waiver such orders originating from
joint back-office (‘‘JBO’’) participants,
but due to an oversight, such orders
were not excluded. Therefore, the
Exchange now proposes to amend the
Waiver to exclude such orders
originating from JBO participants.
A JBO is an arrangement whereby a
broker/dealer maintains a nominal
ownership interest in its clearing firm.
The clearing firm will issue a special
class of non-voting preferred stock to
other broker/dealers that clear their
proprietary positions through the
clearing firm. JBO participants are not
considered self-clearing for any purpose
other than the extension of credit under
CBOE Rule 12.3 or under comparable
Sfmt 4703
E:\FR\FM\19SEN1.SGM
19SEN1
58064
Federal Register / Vol. 76, No. 181 / Monday, September 19, 2011 / Notices
mstockstill on DSK4VPTVN1PROD with NOTICES
rules of another self-regulatory
organization.4
JBOs are separate entities from the
CTPHs with which they maintain an
arrangement, and do not have a
complete common identity of
ownership with the CTPHs. JBOs take
advantage of the exposure across the
market that CTPHs afford and use
CTPHs for margin relief. While JBO
trades come into market with the same
origin code as CTPHs, these trades are
executed on behalf of the JBO and not
the CTPHs. CTPHs have various
obligations, such as clearing accounts
and settling trades, and must abide by
certain requirements, such as those
regarding books and records, and risk
analysis, that JBOs do not. Moreover,
unlike CTPHs, JBOs do not guarantee
performance on contracts, and if a JBO
backs out of a position or otherwise
cannot maintain a position that the JBO
had taken, the CTPH is still on the hook
to maintain that JBO position. Also,
unlike CTPHs, JBOs are not self-clearing
for the purposes of facilitation.5 Further,
CTPHs must work with the Options
Clearing Corporation (‘‘OCC’’) to clear
trades and satisfy OCC requirements on
subjects such as capital requirements,
which JBOs do not need to satisfy. In
recognition of the obligations and
liabilities that CTPHs possess and
which JBOs do not possess, and because
JBOs are not self-clearing for the
purposes of facilitation, the Exchange
does not at the present time desire to
provide the Waiver to JBOs, and
therefore proposes to exclude JBOs from
the Waiver. Finally, the Exchange
currently excludes JBO orders from the
Fee Cap and Sliding Scale.6 Excluding
JBOs from the Waiver helps to achieve
a level of consistency in the Fees
Schedule.
As previously stated, JBO trades come
into the market with the same origin
code as CTPHs. However, CTPHs may
possess different clearing firm numbers;
each CTPH has a number for its own
trades, and a different number for each
JBO. Therefore, JBO trades will be
identified and differentiated from CTPH
trades by these different numbers.
The proposed rule change would take
effect on September 1, 2011.
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) of the Act,7
in general, and furthers the objectives of
Sections 6(b)(4) 8 of the Act in
particular, in that it is designed to
provide for the equitable allocation of
reasonable dues, fees, and other charges
among CBOE Trading Permit Holders
and other persons using Exchange
facilities. The Exchange believes that
amending the Waiver to exclude JBO
orders is reasonable because the amount
of the fee, either $0.20 or $0.25 per
contract (depending on the product), is
within the range of fees assessed by the
Exchange for other orders charged to
other market participants for the same
product.9 Indeed, up until August 1,
2011 (one month ago), when the Waiver
was instituted and unintentionally
included JBO trades, JBOs paid this
amount for firm facilitation orders in
multiply-listed FLEX Options classes.
The Exchange believes amending the
Waiver to exclude JBO orders is
equitable and not unfairly
discriminatory because, unlike CTPHs,
JBOs are not self-clearing for the
purposes of facilitation,10 and because
CTPHs have a number of obligations,
responsibilities and liabilities that JBOs
do not possess. These obligations
include clearing accounts, settling
trades, and must abide by certain
requirements, such as those regarding
books and records, and risk analysis.
Moreover, unlike CTPHs, JBOs do not
guarantee performance on contracts, and
if a JBO backs out of a position or
otherwise cannot maintain a position
that the JBO had taken, the CTPH is still
on the hook to maintain that JBO
position. Further, CTPHs must work
with the OCC to clear trades and satisfy
OCC requirements on subjects such as
capital requirements, which JBOs do not
need to satisfy. In recognition of the
obligations and liabilities that CTPHs
possess and which JBOs do not possess,
and because JBOs are not self-clearing
for the purposes of facilitation, the
Exchange believes it is equitable and not
unfairly discriminatory to exclude JBOs
from the Waiver. Finally, the Exchange
currently excludes JBO orders from the
Fee Cap and Sliding Scale.11 Excluding
JBOs from the Waiver helps to achieve
7 15
4 See CBOE Rule 13.4, Interpretation and Policy
.01.
5 See CBOE Rule 13.4, Interpretation and Policy
.01.
6 See Exchange Fees Schedule section regarding
the Multiply-Listed Options Fee Cap and the CBOE
Proprietary Products Sliding Scale for Clearing
Trading Permit Holder Proprietary Orders.
VerDate Mar<15>2010
15:46 Sep 16, 2011
Jkt 223001
U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(4).
9 See Exchange Fees Schedule, Section 1.
10 See CBOE Rule 13.4, Interpretation and Policy
.01.
11 See Exchange Fees Schedule section regarding
the Multiply-Listed Options Fee Cap and the CBOE
Proprietary Products Sliding Scale for Clearing
Trading Permit Holder Proprietary Orders.
PO 00000
Frm 00118
Fmt 4703
Sfmt 4703
a level of consistency in the Fees
Schedule.
The Exchange operates in a highly
competitive market in which
sophisticated and knowledgeable
market participants readily can, and do,
send order flow to competing exchanges
based on fee levels. The Exchange
believes that the fees it assesses must be
competitive with fees assessed on other
options exchanges. The Exchange
believes that this competitive
marketplace impacts the fees present on
the Exchange today and influences the
proposals set forth above.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
CBOE does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The proposed rule change is
designated by the Exchange as
establishing or changing a due, fee, or
other charge, thereby qualifying for
effectiveness on filing pursuant to
Section 19(b)(3)(A) of the Act12 and
subparagraph (f)(2) of Rule 19b–413
thereunder. At any time within 60 days
of the filing of the proposed rule change,
the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
12 15
13 17
E:\FR\FM\19SEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
19SEN1
Federal Register / Vol. 76, No. 181 / Monday, September 19, 2011 / Notices
Number SR–CBOE–2011–085 on the
subject line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
[Release No. 34–65330; File No. SR–BX–
2011–046]
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Suspension of
and Order Instituting Proceedings To
Determine Whether To Approve or
Disapprove a Proposed Rule Change
All submissions should refer to File
To Amend the BOX Fee Schedule With
Number SR–CBOE–2011–085. This file
Respect to Credits and Fees for
number should be included on the
Transactions in the BOX Price
subject line if e-mail is used. To help the Improvement Period
Commission process and review your
September 13, 2011.
comments more efficiently, please use
only one method. The Commission will I. Introduction
post all comments on the Commission’s
On July 15, 2011, NASDAQ OMX BX,
Internet Web site (https://www.sec.gov/
Inc. (the ‘‘Exchange’’) filed with the
rules/sro.shtml). Copies of the
Securities and Exchange Commission
submission, all subsequent
(the ‘‘Commission’’), pursuant to
amendments, all written statements
Section 19(b)(1) of the Securities
with respect to the proposed rule
Exchange Act of 1934 (‘‘Exchange Act’’
change that are filed with the
or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2
Commission, and all written
a proposed rule change to amend the
communications relating to the
Fee Schedule of the Boston Options
proposed rule change between the
Exchange Group, LLC (‘‘BOX’’) to
Commission and any person, other than increase the credits and fees for certain
transactions in the BOX Price
those that may be withheld from the
Improvement Period (‘‘PIP’’).3 The
public in accordance with the
proposed rule change was immediately
provisions of 5 U.S.C. 552, will be
effective upon filing with the
available for Web site viewing and
Commission pursuant to Section
printing in the Commission’s Public
19(b)(3)(A) of the Act.4 Notice of filing
Reference Room, 100 F Street, NE.,
of the proposed rule change was
Washington, DC 20549, on official
published in the Federal Register on
business days between the hours of 10
August 3, 2011.5
a.m. and 3 p.m. Copies of such filing
Under Section 19(b)(3)(C) of the Act,
also will be available for inspection and
the Commission is (1) hereby
copying at the principal office of the
temporarily suspending File No. SR–
Exchange. All comments received will
BX–2011–046, and (2) instituting
be posted without change; the
proceedings to determine whether to
Commission does not edit personal
approve or disapprove File No. SR–BX–
identifying information from
2011–046.
submissions. You should submit only
II. Summary of the Proposed Rule
information that you wish to make
Change
available publicly. All submissions
should refer to File Number SR–CBOE–
The Exchange proposes to increase
2011–085 and should be submitted on
the credits and fees for certain
or before October 11, 2011.
transactions in the PIP by modifying
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–23897 Filed 9–16–11; 8:45 am]
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BILLING CODE 8011–01–P
14 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
15:46 Sep 16, 2011
Jkt 223001
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The PIP is a mechanism in which a BOX
Options Participant submits an agency order on
behalf of a customer for price improvement, paired
with a contra-order guaranteeing execution of the
agency order at or better than the National Best Bid
or Offer (‘‘NBBO’’). The contra-order could be for
the account of the Options Participant, or an order
solicited from someone else. The agency order is
exposed for a one-second auction in which other
BOX Options Participants may submit competing
interest at the same price or better. The initiating
BOX Options Participant is guaranteed 40% of the
order (after public customers) at the final price for
the PIP order, assuming it is at the best price. See
Chapter V, Section 18 of the BOX Rules.
4 15 U.S.C. 78s(b)(3)(A).
5 See Securities Exchange Act Release No. 64981
(July 28, 2011) 76 FR 46858 (‘‘Notice’’).
2 17
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
58065
Section 7d of the BOX Fee Schedule.
Specifically, the Exchange proposes to:
(1) Increase both the credits and the fees
for PIP transactions in classes that are
not subject to the Penny Pilot (‘‘NonPenny classes’’) from $0.30 to $0.75 per
contract; and (2) increase both the
credits and the fees for PIP transactions
in Penny Pilot classes where the trade
price is equal to or greater than $3.00
per contract (other than in QQQQ, SPY,
and IWM) from $0.30 to $0.75 per
contract. The credits and the fees for PIP
transactions in QQQQ, SPY, and IWM
and in all other Penny Pilot classes
where the trade price is less than $3.00
per contract will remain at $0.30 per
contract. The credits are paid by the
Exchange on the agency order that is
submitted to the PIP auction on behalf
of a customer. The fees are charged by
the Exchange to the order that is
executed against the agency order,
whether such order is a paired order
submitted by the BOX Options
Participant that also submitted the
agency order or an order submitted by
another BOX Options Participant in
response to the PIP auction. The credits
and fees are in addition to any
applicable trading fees, as described in
Sections 1 through 3 of the BOX Fee
Schedule.6
III. Suspension of SR–BX–2011–046
Pursuant to Section 19(b)(3)(C) of the
Act,7 at any time within 60 days of the
date of filing a proposed rule change
pursuant to Section 19(b)(1) of the Act,8
the Commission summarily may
temporarily suspend the change in the
rules of a self-regulatory organization if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
The Commission believes it is
appropriate to evaluate the effect of the
proposed rule change on competition
among different types of market
participants and on market quality,
particularly with respect to the net fee
differential that it would place on BOX
Options Participants that respond to a
PIP auction (‘‘PIP Responders’’)
compared to a BOX Options Participant
that initiated the PIP auction (‘‘PIP
Initiator’’). Under the proposed rule
change, the Exchange would charge
6 Sections 1 through 3 of the Box Fee Schedule
include a $0.25 per contract transaction fee for
contracts traded in the PIP. Depending on its
average daily volume (‘‘ADV’’), a Participant who
initiates PIP auctions may be charged a lower per
contract fee. See Section 7d. of the Box Fee
Schedule. See also infra note 9.
7 15 U.S.C. 78s(b)(3)(C).
8 15 U.S.C. 78s(b)(1).
E:\FR\FM\19SEN1.SGM
19SEN1
]]>Agencies
[Federal Register Volume 76, Number 181 (Monday, September 19, 2011)]
[Notices]
[Pages 58063-58065]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23897]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65325; File No. SR-CBOE-2011-085]
Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Concerning the Clearing Trading Permit Holder
Proprietary Transaction Fee Waiver for Orders in Multiply-Listed FLEX
Options Classes
September 12, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 31, 2011, the Chicago Board Options Exchange, Incorporated
(``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend its Fees Schedule. The text of the
proposed rule change is available on the Exchange's Web site (https://www.cboe.org/legal), at the Exchange's Office of the Secretary, and at
the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
On August 1, 2011, the Exchange implemented a waiver of the
Clearing Trading Permit Holder (``CTPH'') Proprietary Transaction Fee
(the ``Fee'') for CTPHs executing facilitation orders in multiply-
listed FLEX Options classes (the ``Waiver'').\3\ At that time, the
Exchange intended to exclude from the Waiver such orders originating
from joint back-office (``JBO'') participants, but due to an oversight,
such orders were not excluded. Therefore, the Exchange now proposes to
amend the Waiver to exclude such orders originating from JBO
participants.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 34-65007 (August 2,
2011), 76 FR 48190 (August 8, 2011) (SR-CBOE-2011-071).
---------------------------------------------------------------------------
A JBO is an arrangement whereby a broker/dealer maintains a nominal
ownership interest in its clearing firm. The clearing firm will issue a
special class of non-voting preferred stock to other broker/dealers
that clear their proprietary positions through the clearing firm. JBO
participants are not considered self-clearing for any purpose other
than the extension of credit under CBOE Rule 12.3 or under comparable
[[Page 58064]]
rules of another self-regulatory organization.\4\
---------------------------------------------------------------------------
\4\ See CBOE Rule 13.4, Interpretation and Policy .01.
---------------------------------------------------------------------------
JBOs are separate entities from the CTPHs with which they maintain
an arrangement, and do not have a complete common identity of ownership
with the CTPHs. JBOs take advantage of the exposure across the market
that CTPHs afford and use CTPHs for margin relief. While JBO trades
come into market with the same origin code as CTPHs, these trades are
executed on behalf of the JBO and not the CTPHs. CTPHs have various
obligations, such as clearing accounts and settling trades, and must
abide by certain requirements, such as those regarding books and
records, and risk analysis, that JBOs do not. Moreover, unlike CTPHs,
JBOs do not guarantee performance on contracts, and if a JBO backs out
of a position or otherwise cannot maintain a position that the JBO had
taken, the CTPH is still on the hook to maintain that JBO position.
Also, unlike CTPHs, JBOs are not self-clearing for the purposes of
facilitation.\5\ Further, CTPHs must work with the Options Clearing
Corporation (``OCC'') to clear trades and satisfy OCC requirements on
subjects such as capital requirements, which JBOs do not need to
satisfy. In recognition of the obligations and liabilities that CTPHs
possess and which JBOs do not possess, and because JBOs are not self-
clearing for the purposes of facilitation, the Exchange does not at the
present time desire to provide the Waiver to JBOs, and therefore
proposes to exclude JBOs from the Waiver. Finally, the Exchange
currently excludes JBO orders from the Fee Cap and Sliding Scale.\6\
Excluding JBOs from the Waiver helps to achieve a level of consistency
in the Fees Schedule.
---------------------------------------------------------------------------
\5\ See CBOE Rule 13.4, Interpretation and Policy .01.
\6\ See Exchange Fees Schedule section regarding the Multiply-
Listed Options Fee Cap and the CBOE Proprietary Products Sliding
Scale for Clearing Trading Permit Holder Proprietary Orders.
---------------------------------------------------------------------------
As previously stated, JBO trades come into the market with the same
origin code as CTPHs. However, CTPHs may possess different clearing
firm numbers; each CTPH has a number for its own trades, and a
different number for each JBO. Therefore, JBO trades will be identified
and differentiated from CTPH trades by these different numbers.
The proposed rule change would take effect on September 1, 2011.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\7\ in general, and furthers the objectives of Sections 6(b)(4) \8\
of the Act in particular, in that it is designed to provide for the
equitable allocation of reasonable dues, fees, and other charges among
CBOE Trading Permit Holders and other persons using Exchange
facilities. The Exchange believes that amending the Waiver to exclude
JBO orders is reasonable because the amount of the fee, either $0.20 or
$0.25 per contract (depending on the product), is within the range of
fees assessed by the Exchange for other orders charged to other market
participants for the same product.\9\ Indeed, up until August 1, 2011
(one month ago), when the Waiver was instituted and unintentionally
included JBO trades, JBOs paid this amount for firm facilitation orders
in multiply-listed FLEX Options classes.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
\9\ See Exchange Fees Schedule, Section 1.
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The Exchange believes amending the Waiver to exclude JBO orders is
equitable and not unfairly discriminatory because, unlike CTPHs, JBOs
are not self-clearing for the purposes of facilitation,\10\ and because
CTPHs have a number of obligations, responsibilities and liabilities
that JBOs do not possess. These obligations include clearing accounts,
settling trades, and must abide by certain requirements, such as those
regarding books and records, and risk analysis. Moreover, unlike CTPHs,
JBOs do not guarantee performance on contracts, and if a JBO backs out
of a position or otherwise cannot maintain a position that the JBO had
taken, the CTPH is still on the hook to maintain that JBO position.
Further, CTPHs must work with the OCC to clear trades and satisfy OCC
requirements on subjects such as capital requirements, which JBOs do
not need to satisfy. In recognition of the obligations and liabilities
that CTPHs possess and which JBOs do not possess, and because JBOs are
not self-clearing for the purposes of facilitation, the Exchange
believes it is equitable and not unfairly discriminatory to exclude
JBOs from the Waiver. Finally, the Exchange currently excludes JBO
orders from the Fee Cap and Sliding Scale.\11\ Excluding JBOs from the
Waiver helps to achieve a level of consistency in the Fees Schedule.
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\10\ See CBOE Rule 13.4, Interpretation and Policy .01.
\11\ See Exchange Fees Schedule section regarding the Multiply-
Listed Options Fee Cap and the CBOE Proprietary Products Sliding
Scale for Clearing Trading Permit Holder Proprietary Orders.
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The Exchange operates in a highly competitive market in which
sophisticated and knowledgeable market participants readily can, and
do, send order flow to competing exchanges based on fee levels. The
Exchange believes that the fees it assesses must be competitive with
fees assessed on other options exchanges. The Exchange believes that
this competitive marketplace impacts the fees present on the Exchange
today and influences the proposals set forth above.
B. Self-Regulatory Organization's Statement on Burden on Competition
CBOE does not believe that the proposed rule change will impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change is designated by the Exchange as
establishing or changing a due, fee, or other charge, thereby
qualifying for effectiveness on filing pursuant to Section 19(b)(3)(A)
of the Act\12\ and subparagraph (f)(2) of Rule 19b-4\13\ thereunder. At
any time within 60 days of the filing of the proposed rule change, the
Commission summarily may temporarily suspend such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File
[[Page 58065]]
Number SR-CBOE-2011-085 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CBOE-2011-085. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2011-085 and should be
submitted on or before October 11, 2011.
For the Commission, by the Division of Trading and Markets, pursuant
to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-23897 Filed 9-16-11; 8:45 am]
BILLING CODE 8011-01-P
